Entrepreneurs must have a sense of urgency, because markets and competitors never stand still. Trade only lives in the present or the future — yesterday is irrelevant. Inevitably, then, companies rarely think about last year’s results, old products, shuttered companies or previous bosses. Often it feels as if business history is a dusty, arcane discipline of interest only to a few.
Yet there is much to be learnt from the innovators and undertakings of yesteryear. Their successes, mistakes and wisdom can inform even the most practical bosses. Unfortunately, many successful leaders are men and women of action — the sort of people not often given to bouts of reflection or study. This is a shame: if more chiefs of big corporations read more business history, I think they would better understand the great dilemmas they face in the 21st century.
For those who want to be entertained as well as educated about business history, I strongly recommend the play The Lehman Trilogy, currently on in London at the Piccadilly Theatre. It lasts for well over three hours, but no one in the audience could possibly get bored. It tells a story of American capitalism, a family company, and how immigrants can succeed and assimilate. Unlike so many dramas about business, it is not anti-commerce. Everything about it — cast, script, story and set — is first-rate. I should declare an interest: a company with which I’m involved is co-producer.
For readers with an appetite to tackle business history that might prove genuinely useful, I suggest a recent book called The Enlightened Capitalists by James O’Toole. It is almost 500 pages long, but for anyone who wants to investigate a fundamental question— what is business for? — this is a marvellous guide.
There are in fact a lot of texts on this subject, many seemingly written by left-leaning academics. Such works are generally very critical of shareholder capitalism, and usually offer highly theoretical reforms to correct the “problems” they have identified with modern corporations. By contrast, O’Toole’s book is full of true stories about British and American business leaders since the Industrial Revolution who have tried to combine doing good with doing well commercially. It provides terrific details of the philosophies and methods of these enlightened people, so offering lessons for today. Moreover, while O’Toole is also a university professor, one gets the impression that he does not despise free enterprise.
His subjects include William Lever, Milton Hershey, Levi Strauss, Michael Marks, Herb Kelleher, Edwin Land, Anita Roddick and several others. The tales show how these leaders tried to balance stakeholder interests in their enterprises, demonstrating just how difficult it can be to develop and sustain a substantial company when profit is secondary. The idea that firms should always be socially, environmentally and ethically responsible as an overriding priority might be attractive, but in the rough and tumble of actual markets — dealing with real customers and fierce competitors — life is not quite so simple.
In truth, investors tend to seek the highest returns, staff want more pay, suppliers want to charge higher prices, customers like cheaper prices and moral perfection is very difficult (if not impossible) to achieve. For many industries, just making steady profits is hard enough — let alone doing it while also engaging extensively in socially beneficial activities. But, of course, just because corporate virtue is challenging to maintain does not mean one shouldn’t at least try. Inevitably there are endless trade-offs, large and small: selling control, perhaps; or making acquisitions; or closing divisions; or laying off employees.
Surprisingly, not one of the enlightened capitalists described in the book was a pure philanthropist, and few started with the overriding intent of using their business to do good. Most benefited from brilliant early strategic advantages, often innovations such as Edwin Land’s Polaroid film or Levi Strauss’s riveted jeans. That gave them the luxuries of time and money to pursue noble purposes alongside profit-making. Unfortunately, such early technical superiority rarely lasts.
Ultimately, ownership is the most important factor in determining if a business is an outstanding corporate citizen. Something for Britain’s institutional investors to ponder.